Levin Richmond Terminal Corporation v. City of Richmond

Background

Levin Richmond Terminal Corporation, Richmond Pacific Railroad Corporation, Levin Enterprises, Inc., Wolverine Fuels Sales, LLC, and Phillips 66 Company brought related actions against the City of Richmond and the City Council of the City of Richmond. They sought to invalidate and stop enforcement of Richmond’s ordinance titled “Prohibition on the Storage and Handling of Coal and Petroleum Coke.” The ordinance extended an earlier restriction on city-owned property to all property in Richmond and included a three-year period for existing operations to transition.

The complaints alleged that the ordinance would effectively stop coal and petroleum coke from being stored and handled at the Levin-Richmond Terminal. The plaintiffs asserted claims under the Commerce Clause, Contract Clause, Due Process Clause, Takings Clause, and Equal Protection Clause, as well as claims that the ordinance was preempted—displaced or overridden—by the Interstate Commerce Commission Termination Act, the Shipping Act of 1984, and, for Wolverine, the Hazardous Materials Transportation Act.

Motions to dismiss

The court applied the standard for a motion to dismiss, which asks whether the complaints contain enough factual allegations and a legally recognized theory to make relief plausible. It generally accepted the complaints’ factual allegations as true at this stage.

For the dormant Commerce Clause claims, the court rejected the plaintiffs’ extraterritoriality theory because the ordinance regulated storage and handling within Richmond and did not regulate the products’ use, sale, or transportation elsewhere. The court nevertheless held that the plaintiffs plausibly alleged that the ordinance imposed an excessive burden on the interstate markets for coal and petroleum coke compared with its claimed local benefits. The court therefore denied dismissal of the dormant Commerce Clause claims based on the balancing theory, while granting dismissal on the extraterritoriality theory.

The court denied dismissal of the foreign Commerce Clause claims. It found that the complaints sufficiently alleged that the ordinance interfered with the federal government’s role in regulating overseas trade and identified federal laws showing congressional interest in coal and petroleum exports.

The court also denied dismissal of the Contract Clause claims. The plaintiffs alleged contracts involving the transport, storage, handling, and sale of coal and petroleum coke, and alleged that the ordinance prevented them from performing those contractual obligations. The court held that questions about whether the impairment was reasonable and necessary to protect health and safety required a fuller factual record.

The court denied dismissal of the Interstate Commerce Commission Termination Act claims because the allegations raised fact-specific questions about whether the ordinance regulated rail transportation or only had incidental effects on it. The court also denied dismissal of the Shipping Act claims, finding that the plaintiffs plausibly alleged that the ordinance would require the terminal to discriminate against shippers of coal and petroleum coke in a way that could conflict with federal law.

The court granted the defendants’ motions to dismiss Wolverine’s Hazardous Materials Transportation Act claim with prejudice. The court held that coal was not a federally designated hazardous material under that statute and that the federal government’s failure to regulate coal did not preempt Richmond’s ordinance.

The court denied dismissal of the Due Process, Takings, and Equal Protection claims. It found that the complaints plausibly challenged the reliability of the evidence supporting the ordinance, the adequacy of its three-year transition period and variance process, and the alleged singling out of the Levin-Richmond Terminal. The court also found that seeking a variance would be futile on the allegations before it, because the ordinance’s purpose was to end coal and petroleum coke storage and handling at the terminal.

Intervention and amici

Sierra Club and San Francisco Baykeeper sought to intervene as of right or, alternatively, with the court’s permission. The court found that their request was timely and that they had interests that could be affected by the case, but it found that they had not shown that the existing defendants would inadequately represent those interests. Intervention as of right was therefore not warranted.

The court granted permissive intervention. Sierra Club and San Francisco Baykeeper could defend the ordinance but could not expand the case, raise new issues, file independent motions, assert counterclaims, or conduct discovery separately from the defendants. The court also granted leave for the State of California, the State of Utah, and Operating Engineers Union Local No. 3 to file friend-of-the-court briefs.

Disposition

The order states that the defendants’ motions to dismiss were denied except for the Hazardous Materials Transportation Act claim, which was dismissed with prejudice. The court granted Sierra Club’s and San Francisco Baykeeper’s motions to intervene subject to the listed conditions, and ordered the defendants to answer the complaints by September 14, 2020. Judge Yvonne Gonzalez Rogers signed the order.